Pukallus v Cameron

[1982] HCA 63

HIGH COURT OF AUSTRALIA

GIBBS CJ, MURPHY, WILSON AND BRENNAN JJ

PUKALLUS AND ANOTHER v CAMERON

(1994) 180 CLR 447

4 November 1982

Contract—Rectifcation—Mistake—Sale of land—Contract identifying land by survey description—Mistaken belief of parties that certain features were within subdivision—Conveyance—Whether contract to be rectified to include those features.

Decisions

GIBBS CJ I have had the advantage of reading the reasons for judgment prepared by my brother Wilson, and am in agreement with them. I have little to add.

2. Let it be assumed that the trial judge was correct in finding that both the appellants and the respondent intended that the bore, and the twenty-seven acres of cultivation, were to be included in the property sold. Nevertheless, it remained true to say that the common intention of the parties was that the only part of Portion 1154 that should be sold was subdivision 1, and that the total area of land to be sold was 1,910 acres 27 perches. That of course was because they had contracted under the common mistake that the bore and part at least of the cultivation was on subdivision 1. Further, they had no common intention as to where the boundary

(1) (1910) 10 CLR 722, at pp. 726,734.

(2) (1901) 11 QLJR 35, at p. 42.

(3) (1973) 128 CLR 336.

(4) (1956) CLR 186.

(5) (1930) 45 CLR 54, at p.64.

(6) (1949) 86 CLR 271, at p.286.

(7) (1973) 128 CLR, at p.349.

line of the land sold should go to ensure that the bore and cultivation were included within it if it was not the southern boundary line of subdivision 1. They did not advert to the possibility that the bore and the cultivation might not be on subdivision 1. Finally, they had no common intention to subdivide subdivision 2. In these circumstances, to order that the contract be rectified by fixing a boundary line that included part of subdivision 2 was both to depart from so much of the common intention of the parties as had been correctly expressed in the written contract and to formulate a term (as to the situation of the boundary) which neither party had intended to include in the contract. The Full Court was right in holding that there could be no rectification.

3. Although it does not affect the result, it may not be inappropriate to add that the case was one in which the appellants should have made sure that the land was surveyed before completion. Clause 4 of the conditions of sale was in the following terms:

"IT shall be the responsibility of the Purchaser to satisfy himself as to the boundaries of the said land and the location of improvements and for such purpose the Purchaser shall be entitled to conduct an identification survey."

4. Although by cl. 33 the respondent-agreed to move the boundary fence to the correct boundary line of subdivision 1, and the appellants may have believed that it was the respondent's responsibility to have a survey to enable that to be done, the failure of the appellants to ensure that someone conducted a survey before completion was nevertheless an omission to take a precaution that was obviously necessary.

5. I agree that the appeal should be dismissed.

MURPHY J. The principle decisive of this appeal is that where a conveyance of land has been made in accordance with the terms of a written contract, equitable relief is not available to set aside the conveyance except for fraud or total failure of consideration or what practically amounts to total failure of consideration (8). Although in Svanosio v. McNamara, Dixon CJ and Fullagar J. (9) regarded as an exception the very special type of case in which the vendor had no title at all to the property sold, this comes within the general principle as a total failure of consideration.

2. Here there is neither total failure nor what amounts practically to total failure of consideration. The trial judge's finding that there was

(8) See Svanosio v. McNamara (1956), 96 CLR 186, at pp 198, 206-212.

(9) ibid., at p. 198.

no fraud is not challenged. Equitable relief by way of rectification of the contract in order to undo the conveyance is not available. The appeal should be dismissed.

WILSON J. In this action the appellants seek rectification of a contract for the sale of land. They were the purchasers and the respondent the vendor. The contract was entered into in September 1975 and was completed by conveyance in March 1976. The land sold was described, inter alia, as subdivision 1 of Portion 1154 Parish of Cumkillenbar in the County of Aubigny in Queensland (the land). It is common ground that the vendor intended to retain the remainder of Portion 1154 which was situated immediately to the south of subdivision 1. It is also common ground that the southern boundary of the subdivision was not accurately depicted by the boundary fence in the vicinity and that the vendor agreed to move the fence to the correct boundary line. The precise location of that line was not known to any of the parties at any material time.

2. The dispute arises because the parties believed that the land to be sold included a bore and an area of some twenty-seven acres of cultivated land. This belief was acted on after the sale was completed. The appellants took possession of the disputed area of land. It was not until November 1977 that the land was surveyed and the mistake discovered. The present action was instituted in August 1978, the appellants claiming damages for deceit and alternatively rectification.

3. The learned trial judge rejected the allegation of fraud. He found that Mr. Cameron had honestly believed that the boundary was further to the south than it finally proved to be and in that belief he had represented to the appellants that the bore and cultivated area would fall within the land the subject of the sale. His Honour concluded that the case was one of mutual mistake contributed to by innocent misrepresentation and expressed his finding in the following terms:

"I find that both the plaintiffs and the defendant intended that the bore, and the 27 acres of cultivation, were to be included in the property sold, and that the parties entered into the contract under a misapprehension that they were included."

4. On the basis of this finding his Honour ordered rectification. He was mindful of the obligation resting upon the plaintiffs to show precisely the form to which the contract should conform. He noted that during the trial the plaintiffs had amended the statement of claim to plead in the alternative a representation by Mr. Cameron which differed from the particulars supplied earlier, a circumstance which indicated some uncertainty about the precise representation. The evidence of the male appellant reflected this uncertainty. Nevertheless, his Honour stated:

"The parties had not determined exactly how far south of the cultivation the boundary would go. But it was clearly understood by them that it would at least skirt the southern most part of the 27 acres of cultivation. This is a sufficient identification of the land to be included. The land lies between the true boundary and a line parallel to it passing through the southernmost point of the cultivation."

5. The formal order was that the contract be rectified

"by omitting from the description of the property the reference to area and by including in the description all that land south of the boundary between Subdivisions 1 and 2 of Portion 1154 which lies north of a line drawn parallel to it across Subdivision 2 passing through the southernmost point of the 27 acres of agricultural land mentioned in the Statement of Claim".

6. In coming to his conclusions the learned trial judge considered the following clauses contained in the contract:

"3. THE Purchaser or his Solicitor shall within fourteen days from the date the duly executed Contract is received by the Purchaser or his Solicitor deliver to the Vendor or his Solicitor all requisitions or objections (if any) on or to the title. The Vendor shall at the request of the Purchaser or his Solicitor produce all unregistered documents relating to the subject land or property and full and proper particulars of all unregistered dealings which so relate. All requisitions or objections not included in any such writing so delivered shall be deemed waived by the Purchaser and in default of such requisitions and objections (if none) and subject to such (if any) as are so delivered the Purchaser shall be deemed to have accepted title of the subject land.

4. IT shall be the responsibility of the Purchaser to satisfy himself as to the boundaries of the said land and the location of improvements and for such purpose the Purchaser shall be entitled to conduct an identification survey.

9 IF any mistake be made in the description of the premises or any other error whatsoever shall appear in the particulars of the property such mistake or error shall not annul the sale but a compensation or equivalent shall be given or taken by the Vendor or Purchaser as the case may require.

33. The Vendor agrees to move the boundary fence on the southern side of Subdivision 1 of Portion 1154 to the correct boundary line.

34. No claim for compensation shall be made or allowed if the existing boundary fences of the said property do not agree with the boundary lines given in the instruments of title relating to the said property or by reason of any part of the boundary fences not being erected on the actual boundaries or by reason of any part of the boundaries not being fenced and the Purchaser shall accept the said boundary fences as now enjoyed by the Vendor."

7. His Honour was of the opinion that these clauses did not exclude a claim for rectification of the contract on the ground of a mutual mistake brought about by the misrepresentation of the respondent.

8. On appeal to the Full Court their Honours were unable to sustain the trial judge's finding as to the contractual intention of the parties. In their judgment it was not possible to escape the conclusion that the subject matter of the sale was subdivision 1 of Portion 1154. Applying the principles governing appellate review enunciated by this Court in Warren v. Coombes (10), the Court allowed the appeal.

9. The case raises no issue as to the principles which govern the rectification of a contract. Those principles are not in dispute. There need not be a concluded antecedent contract, but there must be an intention common to both parties at the time of contract to include in their bargain a term which by mutual mistake is omitted therefrom (11). So long as there is a continuing common intention of the parties, it may not be necessary to show that the accord found outward expression, notwithstanding the views expressed to the contrary in Joscelyne (12), and Maralinga (13). The opposing view is argued by Mr. Bromley QC in an article in the Law Quarterly Review (14). It is unnecessary to pursue the distinction in the present case because the representation of the respondent and its acceptance by the appellants plainly established such an accord.

10. The second principle governing the rectification of a contract which is material to this case is that which requires the plaintiff to advance "convincing proof" (12) that the written contract does not embody the final intention of the parties. The omitted ingredient must be capable of such proof in clear and precise terms (15). The Court must not assume for itself the task of making the contract for the parties.

11. Mr. Dowsett, counsel for the appellants, in a clear and forthright presentation argued that in the circumstances of the case the Full

(10) (1979) 142 CLR531, at pp. 552-553.

(11) Crane v. Hegeman-Harris Co. Inc., (1939) 1 All ER 662, at p 664; Slee v. Warke (1949),86 CLR 271, at p 280; Joscelyne v. Nissen, (1970) 2 QB 86, at p 98; Maralinga Pty. Ltd. v. Major Enterprises Pty. Ltd. (1973),128 CLR 336, at p 350

(12) (1970) 2 QB, at p. 98.

(13) (1973) 128 CLR, at p. 350.

(14) vol. 87 (1987), p. 532.

(15) Australian Gypsum Ltd. and Australian Plaster Co. Ltd. v. Hume Steel Ltd. (1930), 45 CLR 54, at p 64; Slee v. Warke (1949), 86 CLR, at p 281; Maralinga (1973),128 CLR, at p 349.

Court should have accepted the findings of the learned trial judge. However, the application of each of the principles I have mentioned creates difficulty for the appellants. In the first place, the term which it is sought to include in the contract is clearly inconsistent with the expressed description of the land to be sold. His Honour's statement that "the parties had not determined exactly how far south of the cultivation the boundary would go" suggests that the parties were prepared to engage if necessary in a further subdivision of that part of Portion 1154 which lay outside subdivision 1. But the evidence does not support any such suggestion. From beginning to end the sale was of subdivision 1 of Portion 1154. When Mr. Cameron took the male appellant around the property his representation was focused on a description of where the southern boundary of that subdivision was. He did not know precisely but knew that the existing fence required to be relocated. The bore and cultivated area were already to the north of that existing fence and it is plain that Mr. Cameron thought they would remain to the north of the relocated boundary. He undertook to move the fence to the correct boundary line. There is no evidence to support a finding of an intention to contract for the sale of the bore and cultivated area. The intention was to effect a transfer of subdivision 1 of Portion 1154, a parcel of land which was thought erroneously, to include the bore and cultivated area. If the mistake had been discovered before the conveyance was effected, the appellants could no doubt have avoided the contract. In view of the uncertainty surrounding the location of the boundary which was manifest throughout the negotiations it would clearly have been prudent for the appellants to have undertaken their own survey or to have insisted on the respondent fulfilling his undertaking in that regard. The conditions of the contract which I have set out, excepting the paragraph numbered 33, emphasize both the customary opportunity and the responsibility resting on a purchaser of land.

12. Secondly, even if a new boundary was in contemplation, the appellants face the difficulty of proving the precise term which it is said was agreed between the parties and which through mutual mistake was not incorporated in the written contract. It is not enough merely to prove that the bore and twenty-seven acres of cultivated land were intended to be included in the land the subject of the sale. Although the learned trial judge made a finding in those terms, he recognized that the evidence required the fixation of a new boundary line parallel to the present southern boundary to subdivision 1. The evidence led for the appellants failed to establish such a line with any clarity. In his evidence in chief the male appellant testified that the representation was that the existing fence would have to be moved further south. However, cross-examination by counsel for the respondent assisted his recollection and enabled him to say that the representation was that the existing fence would be pivoted so as to run in an east-west direction at a point south of the southernmost point of the cultivated area. In his re-examination he described how Mr. Cameron had pointed some distance away to the eastern end of the existing fence line and said that he thought the real boundary would cross the fence at that end. In answer to his Honour, he said at that stage he understood it to be south of the cultivation. He explained that the nearest cultivation was some three or four hundred metres away from the eastern end. The learned trial judge summed up the position as he saw it in the words which I have already cited. He acknowledged that the parties had not determined how far south of the cultivation the boundary would go, but ruled that sufficient identification of the land to be included was to be found in their "clear understanding" that it would at least skirt the southernmost part of the twenty-seven acres of cultivation. In my respectful opinion, his Honour's conclusion is a rationalization of the evidence that might be supportable only if the established principles concerning rectification did not require convincing proof of the precise variation to the written agreement. Here there is no convincing proof. There is some substance in the complaint of counsel for the respondent that his Honour drew a boundary line which was not advanced by any witness at all.

13. Furthermore, as I have already stated, all the conversations upon which his Honour relied were set in the context of an attempt by Mr. Cameron to explain where he thought the southern boundary to subdivision 1 of Portion 1154 would go. It was not an attempt to describe the subject matter of the property to be sold independently of its real property description.

14. Reference was made in the course of argument to the fact that the contract had been merged in the conveyance and the possible relevance to this case of the principle of equity expressed in the joint reasons of Dixon CJ and Fullagar J. in Svanosio v. McNamara (16). In view of the conclusion to which I have come it is unnecessary to consider this aspect of the matter.
(16) (1956) 96 CLR 186, at p. 198.

15. I would dismiss the appeal.

BRENNAN J. Mr. Cameron as vendor and Mr. and Mrs. Pukallus as purchasers entered into a contract in writing dated 16 September 1975 for the purchase of land described in the contract as:

"leasehold Portion 303 Parish of Jimbour Portions 494, 503, 504, 505 550 556, 557, 1155 and subdivision 1 of Portion 1154 Parish of Cumkillenbar County Aubigny Parish Jimbour and Cumkillenbar containing 1910 acres 0 roods 27 perches." Before the contract was signed Mr. Cameron and Mr. Pukallus rode on horseback over parts of the land. They inspected a bore and an area of cultivation which lay in the vicinity of the southern boundary of subdivision 1 of Portion 1154, and at that time they both believed that the bore and the cultivation were within the boundaries of subdivision 1. The sale was completed. No survey of the boundary was made prior to completion.

2. In 1977 a survey revealed that the southern boundary of subdivision 1 lay to the north of both the bore and the cultivation. The purchasers sought, inter alia, rectification of the contract in the Supreme Court of Queensland. D.M. Campbell J. found that the parties "intended that the bore, and the 27 acres of cultivation, were to be included in the property sold, and that the parties entered into the contract under a misapprehension that they were included". His Honour ordered that the contract be rectified:

"by omitting from the description of the property the reference to area and by including in the description all that land south of the boundary between subdivisions 1 and 2 of Portion 1154 which lies north of a line drawn parallel to it across subdivision 2 passing through the southernmost point of the 27 acres of agricultural land mentioned in the Statement of Claim".

3. The agricultural land referred to in the order was the area of cultivation, and thus the effect of his Honour's order was to add to the land described in the contract a parcel of land, being part of subdivision 2, lying to the south of the southern boundary of subdivision 1 and including the bore and the cultivation. His Honour's order declared: "that subject to the necessary consents being obtained, the contract as rectified should be specifically performed and carried into execution and it is ordered and adjudged the same accordingly."

4. Mr. Cameron appealed to the Full Court which set aside the finding made by the learned trial judge and allowed the appeal. The Full Court set aside the judgment and orders of the learned trial judge and ordered judgment for the defendant to be entered. Mr. and Mrs. Pukallus appeal to this Court, seeking a restoration of the order of the trial judge.

5. The finding made by D. M. Campbell J. as to the intention of the parties appears to be amply supported by the evidence, but it is not reflected precisely in the order for rectification which his Honour made. The intention which he found was that a parcel of land, undefined except that it included the bore and the cultivation, was to be included in the sale. The order, however, described a parcel to the south of subdivision 1 and specified its boundaries. The order went beyond what his Honour found the common intention of the parties to be, and therefore the terms of his order cannot be supported.

6. D. M. Campbell J. found also that the parties had entered into the contract under a misapprehension that the bore and the cultivation were included in what was sold. But the relief which Mr. and Mrs. Pukallus were seeking could not arise out of a common mistake as to the subject matter of the contract. They did not seek to avoid the contract of sale or the transfer of the land described in it, nor could they have done so (17). Mr. and Mrs. Pukallus affirmed the contract and the transfer and sought rectification of the contract in order to compel a transfer of an additional parcel of land. They sought rectification not because of a mistake affecting their common intention as to the subject matter of the sale, but because of an alleged mistake in the expression of that common intention in the written contract. Had the parties agreed upon an additional parcel and mistakenly failed to express it in the written contract? This is the critical question.

7. Although the remedy of rectification is no longer held to depend upon proof of an antecendent concluded contract (18), it is necessary to show a concurrent intention of the parties, existing at the time when the written contract is executed, as to a term which would have been embodied in the contract if the parties had not made a mistake in expressing their intention. Proof of such an intention is necessary to "displace the hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties" (19).

8. Where parties enter into a written contract for the sale of land and describe the parcel of the land sold by its survey description, the hypothesis is that the boundaries of the parcel are fixed in accordance with that description and not by reference to boundary fences, survey pegs or other topographical features. The hypothesis may be rebutted by proof that the parties agreed upon the parcel of land to be sold by reference to such fences, pegs or other precise topographical features (20). In such a case, if the parcel comprised

(17) cf. Svanosio v. McNamara (1956), 96 CLR 186.

(18) Slee v. Warke (1949), 86 CLR 271, at p 280; Maralinga Pty. Ltd. v. Major Enterprises Pty. Ltd. (1973), 128 CLR 336.

(19) ibid., at p 351, per Mason J.

(20) cf. Donaldson v. Hemmant (1901), 11 QLJ 35, at p 42, per Griffith CJ

in the survey description does not conform to the agreed parcel, physically identified, a party may be able to satisfy the requirements to which Lord Chelmsford LC referred in Fowler v. Fowler (21) in a passage expressly approved by this Court in Australian Gypsum Ltd. and Australian Plaster Co. Ltd v. Hume Steel Ltd. (22) and in Maralinga (23):

"It is clear that a person who seeks to rectify a deed upon the ground of mistake must be required to establish, in the clearest and most satisfactory manner, that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution, and also must be able to shew exactly and precisely the form to which the deed ought to be brought. For there is a material difference between setting aside an instrument and rectifying it on the ground of mistake. In the latter case you can only act upon the mutual and concurrent intention of all parties for whom the Court is virtually making a new written agreement."

9. In the present case, the parties had not identified, by reference to fences or other topographical features, the precise boundaries of the parcel the subject of the sale before they entered into the written contract. That contract identified the parcel according to its survey description, and no antecedent common intention was proved to displace the hypothesis that the survey description expresses the true contractual intention of the parties. On the contrary, the hypothesis is strengthened by cl. 33 which provides that the vendor should reposition on the true southern boundary of subdivision 1 a fence which had been erected in the vicinity but not on that boundary.

10. Rectification of the contract to include a parcel of land lying outside and to the south of subdivision 1 could not be decreed merely on proof that the parties mistakenly believed that the bore and the cultivation lay within the boundaries of subdivision 1. Rectification could be decreed only upon proof that the parties intended that a further parcel of land, precisely identified, was to be included in the sale. In the absence of evidence of such an intention, the claim for rectification was bound to fail. There was no evidence tending to show that Mr. Pukallus and Mr. Cameron had agreed on a southern boundary corresponding with that fixed by the order of the learned trial judge. The mistake shared by Mr. Pukallus and Mr. Cameron was not a mistake as to the embodying of their

(21) (1859) 4 De G. and J. 250, at p. 265 (45 ER 97, at p. 103).

(22) (1930) 45 CLR 54, at p. 64.

(23) (1973) 128 CLR, at p. 349.

intention in the written contract. The only mistake was a mistake as to what features were within the boundaries of the land sold.

11. It follows that the order for rectification and the consequential orders made by the learned trial judge were rightly set aside by the Full Court. The appeal from the judgment of the Full Court must be dismissed with costs.

12. Appeal dismissed with costs.

13. Solicitors for the appellants, Wonderley and Hall.

14. Solicitors for the respondent, Carvosso and Kinship.